What are ERC Tokens & Why Is It So Popular?


Ethereum is the most popular Blockchain network in the world. It has been used by many companies, developers and projects since its launch in 2015. Many of these projects are based on smart contracts. To write smart contracts, developers must follow Ethereum Request for Comments (ERC) rules.

Ethereum Request for Comments (ERC)

When it comes to the Ethereum Request for Comments (ERC) protocol, there are a few things that you need to know. ERC is a type of protocol that defines the guidelines for smart contracts written on Ethereum. This is important for exchange platforms as they won’t need to check token by token if they have a withdraw function or what is the name and symbol of the token being traded. It is also useful for users, as they won’t need to know how to read the smart contract; instead, they need to know if a specific protocol is implemented. So, if you know your NFT follows the ERC721protocol, then you know it has all the basic functionalities of an NFT, and you also know it can be traded in most exchanges platforms available today.

The most important thing to understand about ERC tokens is how they work and how they are created. These tokens can be used in any decentralized application (dApp) that runs on top of Ethereum blockchain technology.

Here’s what we mean:

  • The Ethereum Foundation defines ERC-20 token standards as well as many other types of standards related to Ethereum development.
  • The idea behind these types of protocols is that developers will have an easier time creating dApps with built-in functionality already programmed into them; this way, users can easily interact with those apps without having their own custom programming language requirements beforehand!

There are thousands of protocols approved for different uses. In this article, we selected some of the most popular and interesting protocols available and will explain them to you.

ERC-20 Token Standard

ERC-20 is a standard for tokens built on the Ethereum network. It defines a common list of rules that an Ethereum token has to follow so that it can be easily exchanged for other ERC-20 tokens.

These tokens are fungible and thus can be traded against each other on exchanges, similar to how we trade stocks of different companies or currencies in the real world.

ERC-777 Token Standard

ERC-777 is an Ethereum token standard that was introduced in 2019. It was created by Fabian Vogelsteller, the same developer who created the ERC-20 token standard.

ERC-777 is designed to be a more efficient version of ERC-20, with some additional functionality:

  • Same as ERC 20 but with bugs fixed. Implementing ERC-1820 can check if the recipient can handle the tokens, avoiding an unwanted burn.
  • It mimics how eth transactions work (with the possibility to send data along with the address and value), and an additional function allows a contract to transact on behalf of another contract.
  • It implements hooks, allowing it to automate behaviour.

ERC-721 Token Standard

Now we are in the realm of NFTs. ERC-721 is a standard interface for non-fungible tokens (NFTs). It provides basic functionalities, like the tracking and the transfer of NFTs. It is ERC-165 compatible, which means it doesn’t have the same security issues as ERC-20. When we talk about NFT, we are talking about this protocol. It is useful, as stated by its authors, as a

representation of physical properties, like houses or artwork;

a Virtual collectable, like in-game items or digital artwork;

‘Negative value’ assets, like loans and other responsibilities.

Its main improvement from traditional fungible tokens, like Bitcoin, is that it allows ownership tracking. As the fungible token is identical to each other, they cannot be tracked. By creating a unique token, tracking became possible.

The ERC-721 protocol defines basically five smart contract functions:

  • safeTransferFrom(), used to transfer ownership of an NFT
  • balanceOf(), to check all NFTs assigned to an owner
  • ownerOf(), to check the owner of an NFT
  • approve(), used to approve a third party's right to take ownership over an NFT

Another great feature of an ERC-721 is its metadata, as it allows the association of an NFT with a URI. For example, the NFT of a house represents the property. But its occupants or the number of bedrooms can change over time. The number of applications is immense. An NFT can direct you to a homepage or can direct you to an image that can change over time. This allows an NFT to be a membership title, game character, or item that can develop. Your imagination is the limit.

The ERC-721 standard was proposed in November 2017 by William Entriken, Dieter ShirleyJacob Evans and Nastassia Sachs, and it has been implemented in many popular projects like CryptoKitties and Cryptogs.

ERC-165 Interface Verification Standard

ERC-165 is an interface verification standard for Ethereum. It allows a contract to check the interfaces another contract has. This is important because a contract can't know if the recipient address can support receiving a token without it. Some contracts have millions of dollars worth of tokens but lack a withdrawal function. That was a common issue, you send a token to a contract, but this contract cannot transfer it because it lacks the necessary functions. What happens is the token is burned. But if, before sending the token, a contract can check if the recipient will be able to transfer it in the future, then you can guarantee that your tokens won't accidentally get burned by such situations!

ERC-1820 Registry Standard

The ERC-1820 standard is an evolution of ERC165, as it allows for customizable interfaces that user accounts can check. This is useful as any interface created can be consulted by any account, not only contracts. This protocol also allows for gas-save as it stores the information regarding ERC-165 compatibility in the cache and is fully decentralized, as opposed to ERC-672.

ERC-173 Contract Ownership Standard

The ERC-173 defines standard functions and events for owning and controlling a contract. Its main beauty is simplicity. It has a function to check the owner, a function to transfer the ownership and an event for it. Finally, it implements the ERC-165 to check for ERC-173 compatibility.

This standard allows the association of an NFT or a domain name with a contract, thus allowing to association ownership of a contract with the ownership of an NFT or an ERC-137 domain name.

ERC-137 Ethereum Domain Name Service Standard

ERC-137 is the famous ENS. It associates addresses with human-readable names, just like a web address in the format www.something.com is associated with an IP address. It allows multiple resources to be associated with the ENS name, it allows traditional websites to be resolved by a blockchain name, making it easier for conventional web2 sites to migrate to a blockchain without having to change their web address. Anyone can register an ENS in ens.domains for a fee. Its market value as of 10/10/2022 is over US$ 330 millions.

ERC-1155 Multi Token Standard

Here we get to the ultimate token contract, as of today. The ERC-1155 standard provides everything the ERC-20 and the ERC-721 provide and much more. If you want to create two coins, you need two ERC-20 contracts. If you want to create two NFTs collections, also you will need two ERC-721 contracts. With ERC-1155, you can create as many coins and collections as you want. This is possible by creating an id parameter that can identify the coin or the NFT collection. In this standard, an NFT is merely a token with a mint amount of one.

This standard also allows for multiple token transactions and multiple token transfer approval, being invaluable for saving gas costs.

ERC-3525 Semi-Fungible Token Standard

The ERC-3525 works with three variables, ID, slot and value. With this mechanism, it can treat an asset as unique while allowing it to be split between multiple owners. This is done by making all NFTs of the same slot fungible. That means the value of two NFTs of the same slot is treated as fungible, even though their ID is different. This type of token is more suitable for financial instruments or to represent a property of multiple ownership than to represent collectables or products. It is also compatible with the ERC-721 standard.

ERC-4907 Rental NFT Standard

This standard extends ERC-721 with an additional “user” role that can be granted to any address. The user can’t transfer the NFT after the role expires. This standard can be used to manage rights transfer ship through NFTs by differentiating owners and users.


In this article, we discussed various types of ERC protocols. The idea of creating such a list was to help people understand what is happening worldwide and how different types of tokens can be used in different industries. We hope that you have found it useful!

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